The voluntary carbon market may not be perfect, but its flaws have become catalysts for positive change. Public scrutiny, and market need for greater transparency, has played a role in exposing weaknesses and pushing the system to improve.
The result is a stronger, more transparent and accountable market that continues to channel climate finance into real mitigation, where contribution and compensation work together as complementary forces for accountability and impact.
Let’s consider:
1. The Market of 2025 Is Not the Market of 2010
Most studies criticizing carbon offsetting including the Annual Reviews paper by Romm, Lezak & Alshamsi (2025) analyze projects from a time when the nascent market operated with limited oversight and data. The bulk of those credits pre-date reforms now embedded in the Integrity Council for the Voluntary Carbon Market’s (ICVCM) Core Carbon Principles (CCPs), the Article 6.2 and 6.4 frameworks under the Paris Agreement.
These reforms directly address the once-“intractable” flaws:
- Over-crediting is reduced through dynamic, market-linked baselines that reflect real economic evolution and ever-improving technology that make MRV increasingly better and in near real-time.
- Double counting is prevented by host-country authorization under Article 6.2 and increased oversight by independent, multi-registry organizations such as the Climate Action Data Trust, which can only make double counting increasingly unlikely to occur in the first place or to ever go unnoticed.
- Non-additionality tested through more stringent penetration, financial and policy screens, continuously updated by standards,
- Impermanence mitigated via dynamic buffer pools, which are now being interlinked and supported with insurance (Verra 2025, GS 2025, Kita 2025), satellite and AI-assisted MRV.
- Leakage measured through remote sensing and dynamic baselines that capture shifting activity patterns, not to mention evolving science-based, data-intensive, dynamic economic-ecological modeling approaches for estimating regional CSF leakage, with global applicability (Daigneault et al. 2025).
Take the example of REDD+ and IFM projects. Leakage at an activity level can’t always be perfectly measured, but modern frameworks such as BC FCOP 2.0 and Federal Carbon Offset Program (FCOP) apply conservative leakage factors of 60–70% to account for regional effects. Dynamic baselines now adjust automatically as local harvesting or land-use patterns change, turning a static assumption into a living variable.
The carbon market has done what every maturing system does: it has learned, adapted, and professionalized. To claim offsetting “does not work” because early vintages failed is like dismissing the electric-vehicle industry because the first models had poor range or if we had given up on growing flowers after the Tulip craze and collapse of the 16 century or if we had banned banking altogether because bank runs have happened in the past.
2. Contribution Claims Are Evolution, Not Rejection
Romm et al. (2025) argue that offsetting should be replaced by “contribution claims.” In reality, this is a logical evolution of accountability, not a repudiation.
- Compensation means: “I balance my remaining emissions by funding an equivalent reduction elsewhere.”
- Contribution means: “I invest in mitigation beyond my boundary without claiming equivalence.”
Both depend on measurement and verification. Remove compensation entirely, and you lose the discipline of quantification. A company could “contribute” $10 million to climate action, but without a tonnage reference, its impact becomes symbolic — impossible to benchmark or compare.
If an entity has a clear pathway to reduce emissions internally and, after doing all that is technically and economically feasible, it participates in carbon markets to compensate for its residual footprint, that is additional action, not avoidance. The base case doing nothing leads to higher emissions. Compensation allows them to go further, turning residual impact into measurable climate finance.
Research on corporate social responsibility (CSR) proves this point. Studies from Harvard Business School (Ioannou & Serafeim, 2019), LSE (Flammer, 2021), and a Wharton 2022 meta-analysis show that CSR programs without quantifiable accounting frameworks lose credibility, attract less funding, and deliver weaker results. CSR initiatives with measurable, market-linked outcomes mobilized 2–3× more capital.
In short, accounting and metrics drive accountability and compensation frameworks make that possible. Without them, contribution risks becoming another untracked CSR slogan. Compensation not only enforces measurement but also sizes the market, drives demand, and prices climate value.
3. Contribution Is Not Optional, It Is a Necessity
Even the most ambitious corporate decarbonization pathways cannot eliminate all emissions internally. The IPCC AR6 and UNEP’s Emissions Gap Report both confirm that every credible 1.5 °C pathway requires substantial cross-boundary mitigation finance, in other words, contribution.
Without voluntary carbon markets, capital would not flow efficiently to where abatement is most effective. Properly governed offsetting ensures that finance goes where it achieves the highest marginal climate benefit per dollar spent.
4. Remote Renewables: When Carbon Finance Meets Climate Justice
Consider remote solar and wind projects in sub-Saharan Africa. These are not “non-additional” just because renewables are mainstream in the OECD; their baseline is no grid at all. Such projects replace diesel and coal, expand access to education and healthcare, power livelihoods and quality of life.
At $10–$20 per tonne, their credits function as performance-linked climate aid, often determining whether the project is built at all.
Similarly, forestry and soil-carbon projects, while less permanent than engineered removals, are still durable, providing enormous ecosystem and social co-benefits.
Managed forests reduce wildfire risk and enhance biodiversity; avoided deforestation keeps millions of tons of trees and other vegetation from being cut and burned, releasing colossal amounts of GHGs into the atmosphere (and preventing bare soil from being eroded away, clogging rivers and causing landslides and floods) while millions of animals and plants lose their habitat; newly planted diverse (close-to-nature) forests actively sequester carbon for decades and potentially centuries, provide much-needed jobs in often depressed rural areas, supplying legal timber for building and other uses, while protecting biodiversity, soils, and ensuring water supply and buffering against landslides, heatwaves, droughts and floods that would exact heavy tolls in lives and economic damage.
Regenerative agriculture builds soil resilience, helping food companies decarbonize their value chains and empowering farmers with modern agricultural techniques with less environmental footprint.
The treatment of permanence by some embrace a binary approach: A tonne of CO2 is either stored "permanently" or it is not. This binary framing oversimplifies science-based data. The IPCC Sixth Assessment Report (Kikstra 2022). notes that CO2 has multiple atmospheric timelines. Research (Joos et. al. 2013) shows that Carbon removal from the atmosphere is not a binary threshold, but a decay curve, and so permanence must follow that curve instead of being imposed arbitrary cut-offs.
Permanence is a continuum. It is important to differentiate between storage that lasts for a few decades and storage that persists for centuries, without dismissing the former as inconsequential. The climate system contains potential tipping points beyond which large and irreversible changes can occur. That is why storing carbon today can deliver greater marginal value than storing it decades for now, so we can prevent runaway climate disasters.
5. Market Pricing Reflects Evolution, Not Failure
Today’s price spectrum in the Voluntary Carbon Market reflects abatement cost, technological maturity, durability, and measurability not dysfunction. The market enables solutions across the full mitigation hierarchy avoidance, reduction, and removal each with a distinct cost profile and role in achieving net zero.
- Technological CDR (DAC, biochar, mineralization) – $100–$900/tCO₂e: high-durability removals for long-term carbon balance.
- Nature-Based Removals – $20–$50/t: near-term carbon storage through land-use restoration.
- Nature-Based Avoidance – $10–$30/t: prevention of emissions from deforestation and degradation.
- Distributed Renewables / Cookstoves / Water Filters – $6–$18/t: accessible reductions with measurable impact.
- Industrial Decarbonization (Cement, Steel, Mining) – $30–$100/t: offsets de-risking innovation in hard-to-abate sectors.
- Established Abatement (Landfill Gas, Refrigerants) – $5–$10/t: low-cost, high-purity reductions still outside full regulation.
Low prices do not signify low value; they mirror the true cost of abatement for mature, measurable solutions. These offsets are not about justifying continued emissions, but about preventing and remediating residual emissions in areas where regulation or technology has yet to catch up.
By channeling finance toward credible, quantifiable interventions, the VCM fills policy and technology gaps, promoting responsible action in sectors between compliance frameworks. It provides companies with flexible, integrity-based pathways to decarbonize in line with their operational realities, while accelerating the innovation curve toward potentially durable removals.
Clear Signals from the Price Integrity Index
ClearBlue Markets, in partnership with Calyx Global, has been tracking market trends through the Calyx-ClearBlue Price Integrity Index, which measures how pricing aligns with project quality and climate impact. Early 2025 data show a growing market preference for high-quality credits, particularly those with robust verification and long-term climate benefits.
This aligns with the spectrum above: buyers are increasingly discerning, rewarding projects that offer measurable emissions reductions, and durable removals. Rather than indicating a failing market, this trend signals a VCM reset toward maturity, where pricing more accurately reflects intrinsic value. As transparency improves, investment is flowing into projects that deliver climate impact, supporting a more stable, credible, and functional voluntary carbon market.
Across this spectrum, projects remain financially additional, depending on carbon revenue to sustain or expand. This diversity of durability, geography, and impact signals a healthy, differentiated market, not a broken one.
Read: The Guardian (Again): Are they right or wrong? From Calyx Global
6. From Equivalence to Evidence and the Danger of Abandonment
The next generation of carbon markets is not about pretending to erase emissions; it is about proving measurable climate benefits. That shift from equivalence to evidence defines the maturity of today’s carbon finance ecosystem.
Dismissing 25 years of progress as “intractable failure” ignores how markets evolve. Offsetting has matured from fragmented goodwill projects into a rules-based global accountability mechanism. Contribution claims will expand, but they build on, not replace, the infrastructure that compensation created.
Abandoning carbon markets now would not reduce emissions; it would dismantle one of the few scalable systems that channel private finance to real mitigation. This comes at a time when 60% of the Earth is degraded, 38% is highly degraded (Stenzel et al., 2025), and over half of the global economy depends on nature (Herweijer et al., 2020). With political commitment in major economies remaining uncertain and long-standing climate and earth science programs—including critical satellite and space missions—under pressure, undermining market mechanisms would risk reversing progress on both emissions reductions and the financing of effective climate solutions.
Carbon markets remain one of the only quantifiable, apolitical frameworks that sustain momentum when governments falter. The choice is not between offsets and contributions; it is between measurable progress and moral posturing. One builds markets and accountability; the other risks leaving the world with declarations instead of results.
Read: A turning point for the voluntary carbon market (Environmental Finance - interview with ClearBlue Markets president and COO, Richard Myerscough)
The VCM is the greatest environmental markets story ever told. Not because of the controversy, not because of the data, but because it actually functions to the tune of $11 billion cumulative dollars for the last 20 years (Ecosystem Marketplace 2025).
There is no voluntary environmental market that has achieved anything even close. It doesn't exist. It's truly remarkable what has been built by so many dedicated people and organizations. What we need now is to take these lessons while continuing to build the VCM as an example of what's possible.
References:
Daigneault, A., Sohngen, B., Belair, E., & Ellis, P. (2025). A globally relevant data-driven assessment of carbon leakage from forestry. Environmental Research Letters.
Ecosystem Marketplace, 2025. 2025 State of the Voluntary Carbon Market (SOVCM)
GS, 2025. Gold Standard Launches Insurance Assessment Process to Support CORSIA Credit Eligibility
Herweijer, C., Evison, W., Mariam, S., Khatri, A., Albani, M., Semov, A., & Long, E. (2020). Nature risk rising: Why the crisis engulfing nature matters for business and the economy. In World Economic Forum and PwC.
Ioannou & Serafeim (2019) Harvard Business School Working Paper 19-028; Flammer (2021) LSE CEP Discussion Paper No. 1820; Wharton Sustainability Meta-Analysis (2022).
Joos, F., Roth, R., Fuglestvedt, J. S., Peters, G. P., Enting, I. G., Von Bloh, W., ... & Weaver, A. J. (2013). Carbon dioxide and climate impulse response functions for the computation of greenhouse gas metrics: a multi-model analysis. Atmospheric Chemistry and Physics, 13(5), 2793-2825.
Kikstra, J. S., Nicholls, Z. R., Smith, C. J., Lewis, J., Lamboll, R. D., Byers, E., ... & Riahi, K. (2022). The IPCC Sixth Assessment Report WGIII climate assessment of mitigation pathways: from emissions to global temperatures. Geoscientific Model Development, 15(24), 9075-9109.
Kita 2025. Buffers and Insurance in the Voluntary Carbon Market - A Comprehensive Overview.
Romm, J., Lezak, S., & Alshamsi, A. (2025). Are Carbon Offsets Fixable? Annual Review of Environment and Resources, 50.
Stenzel, F., Ben Uri, L., Braun, J., Breier, J., Erb, K., Gerten, D., Haberl, H., Matej, S., Milo, R., Ostberg, S., Rockström, J., Roux, N., Schaphoff, S., Lucht, W., (2025): Breaching planetary boundaries: Over half of global land area suffers critical losses in functional biosphere integrity. – One Earth 8, 101393, August 15, 2025. [DOI: 10.1016/j.oneear.2025.101393]
Verra, 2025. Verra Releases Criteria for Insurance Products for CORSIA-Eligible Carbon Credits.